Monday, April 16, 2012

No matter how you look at the numbers, retail sales continue to rise at an impressive rate; there is absolutely no sign of any weakness here. March sales were up much more than expected, and they have posted a 6.5% gain over the past year. The top chart shows the retail sales "control group," which subtracts autos, building materials, and gasoline: it is up 5% in the past year, and is up by an even stronger 8% annualized over the past three months. The bottom chart looks at total retail sales adjusted for inflation; this measure is up 4% over the past year and has now reached a post-recession high.

Very impressive gains here, especially considering there are some 5 million fewer people working today than at the peak of the last business cycle. I'm not worried that the U.S. economy is vulnerable to a slowdown.

Withholding tax receipts are up 5.85% y-o-y above the comparable weeks last year for the past 5 weeks, and up 6.57% the past 4 weeks. These are very good numbers, and is easily the strongest showing for a BLS reporting period this year.

If auto sales come in close to or above 15 million SAAR this month, expect a very good April jobs report.

I know we're all looking for good news, but why no comments on the disastrous Empire State Manufacturing Index that was also released today. As the owner of a small manufacturing company who has seen a marked slowdown in recent weeks, I am gravely concerned about this news.

The Empire State Index is very volatile and not relied upon by many economists. That said, some aspects of the index were positive (including the headline number which still shows growth) and the futures expectation component was quite positive. The ISM is much more important. If that shows a lot of weakness over a period of time then I'd be more worried.

Re my use of semi-log scales. I find these very useful because the slope of a line plotted on a semi-log scale is equal to the rate of increase. So the straight line rise in real retail sales on this chart tells you quickly that the rate of growth has been relatively constant since the end of the recession.

Great stuff Scott! On another note, a very sad day today for average Argentinians as their government has descended down one more ring in Christina's Peronist hell. Maybe two rings. If you had to imagine the worst stunt that she could pull, you'd come up with the expropriation of a company like YPF.

Hans-Last I checked Argentina exported a helluva lot of soybeans and grain. In fact, Argentine farmers "save" in terms of soybeans. Paper money can be counted on to lose value, so they store up soybeans, which keep for a relatively long period, and when they need a little liquidity, they sell some. This is how they preserve their purchasing power.